An investment is offered whereby £1000 is invested immediately, £2000 is invested in exactly threeyears’ time followed by a further investment of £3000 after a further threeyears. The investment is due to return £10000 in ten years’ from now. (i)Write down the equation of valuefor the investment (ii) Estimatethe yield on the investment.
(a)An investment is offered whereby £1000 is invested immediately, £2000 is invested in exactly threeyears’ time followed by a further investment of £3000 after a further threeyears. The investment is due to return £10000 in ten years’ from now.
(i)Write down the equation of valuefor the investment
(ii) Estimatethe yield on the investment.
(b)
(i)Calculate the present value, at a rate of interest of 6.5% per annum effective, of anannuity where £5000 is paidat the end of the first year, £4,800 is paid at the end ofthe second year, £4,600 is paid at the end of the third year and so on, with paymentsdecreasing by £200 per annum until the payment stream ends afterof 10 years.
(ii)What would the payments be for an investment with the same present value, with equal payments every month?
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